Costco suit can proceed as class action

FEDERAL COURT

Updated 10:04 pm, Thursday, September 27, 2012

A federal judge in San Francisco has revived a nationwide suit against Costco by 700 past and present female employees who accuse the discount retailer of discriminating against women in promotions to management jobs.

In a ruling Tuesday that allowed the suit to proceed as a class action, U.S. District Judge Edward Chen said the women had presented more evidence of systematic bias than the plaintiffs in a proposed class action against Walmart, which the U.S. Supreme Court dismissed last year.

The high court said representatives of as many as 1.6 million female Walmart workers had failed to identify a company-wide policy that allegedly caused disparities in pay and promotions. Scaled-down sex-bias suits have since been filed by Walmart employees in California and Texas.

In contrast to the nationwide Walmart suit, Chen said, women at Costco "have provided significant proof that (the company) operates under a general policy of discrimination" and follows "a common direction emanating from Costco's upper management."

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As a consequence, he said, the plaintiffs have enough in common to join in a single suit against the company, rather than having to pursue individual claims of discrimination.

Costco did not respond to a request for comment. The company has denied discriminating and said disparities in promotions are limited to a few regions.

Last year, Costco persuaded an appeals court to set aside another judge's certification of an earlier version of the suit as a class action, and it could ask the same court to review Chen's ruling.

The suit, originally filed in 2004, claims women have been unfairly passed over for promotion to general manager and assistant general manager at Costco's more than 350 warehouse-style stores in the United States.

Chen said women made up 27.7 percent of the employees eligible for assistant general manager, based on the company's criteria, and received 18.4 percent of the promotions in the five years before the suit. That meant that relatively few women could be elevated to general manager, although their promotional rates to that position were the same as men's, he said.

Costco does not post openings or accept applications for the management jobs, does not specify qualifications, and notifies prospects with a "tap on the shoulder," Chen said. He said the company's chief executive reviews all promotions to general manager, and regional executives review other promotions.

The plaintiffs have also cited testimony by Costco's then-chief executive, Jim Sinegal, and other executives that they believed women's role as domestic caretakers made them less interested in promotional opportunities.

Chen said those statements may support a sociologist's assessment, on behalf of the plaintiffs, that - as the judge summarized it - "Costco's culture fosters and reinforces stereotyped thinking, which allows gender bias to infuse the promotion process from the top down."

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